Profit is an award for risk bearing, however, only a right degree of risk can prove beneficial to the company. Risk managers have this role to analyze the risks involved and develop strategies to reduce the risk potential. Every investor has his own set of goals and risk bearing capacity. Risk managers have to accordingly guide them to achieve optimum results and diversify their portfolio so that they can achieve optimum results. Inflation, economic conditions, government rules, taxation rules, etc., impact the risk managers.
Key skills for an entry-level role would be:
- Strong analytical and quantitative skills: Risk Analysis requires heavy quantitative skills and a lot of number crunching.
- Knowledge of theories of risk, risk metrics: Risk terms are quite different from regular financial parlance and requires some knowledge and studying.
- Attention to detail and diligence: Risk Management strives to reduce risk. Needless to say, not being accurate would just add to these risks!
- Knowledge of financial markets,asset classes and regulations: A Risk Analyst should be familiar with the financial markets, asset classes and should keep abreast of the latest regulatory environment.
- Comfort with Quant models/Statistical software: Risk analysis requires using complex quantitative models and statistical software. Hence knowledge and comfort with these would be an advantage.
How to get in:
A major chunk of Risk Management candidates are hired by Banks and Consultancy companies
- Do an MBA in Finance or Masters in Mathematics / Statistics / Economics and focus on subjects related to risk in your syllabus. Take additional electives if needed
- Try to hone your quantitative modeling and statistical skills
- Financial Risk Manager (FRM) or Professional Risk Manager (PRM) certifications are extremely sought after in this field
- Quantitative Risk Modeling is an essential skillset and it would be good to take up courses on this